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Ryanair Warns Of ‘Brexit’ Impact to UK, Reports Strong Traffic and Profits

    Ryanair warns a ‘Brexit’ could hurt the UK Economy, in its annual report published today which shows growth in traffic and passenger numbers.

    • Ryanair reported a rise in full year profit of 43% to €1,242M.
    • Traffic grew by 18% to 106 million passengers, and the airline’s load factor rose by 5% points to 93%.
    • The airline’s average fare dropped 1% to €46, and unit costs fell 6% (ex-fuel down 2%)
    • Ryanair reports it is 44% hedged for FY18 and that hedging will deliver fuel savings of circa €200m (as price savings are offset by increased flight hours).

    “We plan to pass on most if not all of these fuel savings to our customers in lower air fares particularly as we grow capacity over the next 12 months in key markets around Europe,” Ryanair states.

    Costs

    Unit costs fell 6% in FY16, despite expansion to more primary airports, the adverse impact of €/£ exchange rate movements, and the airline’s investment in its Always Getting Better (AGB) customer satisfaction program.

    • Ex-fuel unit costs were down 2% for the full year.

    The airline also reports it continues to track ahead of its long term target of 20% on ancillary revenue, and says that with its new personalised website, introduced last October, it will continue to improve cross-selling of all ancillary products and services with the aim increasing customer spending during FY17.

    Shares

    Ryanair reports that its 4th (€800m) share buyback programme, announced in February, is now 80% complete with expectations that it will be fully completed by the end of September.

    “This is in addition to the €398m special distribution last November and the €400m share buyback completed in August 2015. Following this latest buyback, we will have returned over €4 billion to shareholders in just 8 years since 2008,” the airline states.

    Cash

    The airline also reports net cash of €312m as of March 2016, following a capital expenditure of €1.2 billion, including debt repayments of €385m and shareholder payments of over €1.1 billion during FY16.

    Ryanair’s CEO, Michael O’Leary, said of the airline’s annual performance:

    “FY16 was a year in which we delivered significant traffic and profit growth in all 4 quarters (despite an ave. oil price of $90bbl as a consequence of hedges put in place in 2014) as our AGB service programme is attracting millions of new customers to our lowest fare/lowest cost model.”

    Always Getting Better Still

    One of the biggest shifts propelling the airline’s growth over the past three years has been Ryanair’s decision to soften its Low-Fares/No-Frills marketing model to a more user-friendly and generally friendly strategy with its Always Getting Better program, now entering Year 3.

    In fairness–O’Leary’s boisterous nature aside–Ryanair was never a particularly rude airline. Its staff, in my experience, have always been pleasant and fully committed to ensuring the success of the team and the satisfaction of customers.

    But Ryanair lacked the niceties one associates with competitors. Its shift to soft, which includes extra traveller benefits, better in-cabin product and the airline’s zealous embracing of new technology has paid off.

    Ryanair is still operated with a very grounded realism on what it takes to make money in the clouds.

    But it is also still daring, provocative, edgy, and funny.

    Ryanair is aware of and respectful of its brand positioning at all times—while getting better at it.

    The Mad Hatter could never accuse Ryanair of losing its muchness. In fact, it is now muchier than it was before.

    Solid Performance, Except For the Strikes

    Ryanair expresses concerns over repeated labor action in the skies over Europe. The airline and the A4E airline group of which Ryanair is a founding member have repeatedly urged the European Commission to address ongoing air traffic controller strikes.

    “Q4 yields on close-in Easter bookings were adversely impacted by over 500 flight cancellations following the Brussels terrorist attacks and repeated (mainly French) ATC strikes,” Ryanair states in its report issued Monday morning.

    “In recent weeks Italian, Greek, Belgian and French ATC unions have also engaged in unjustified strikes which caused a further 200 plus cancellations. Q1 yields will be negatively impacted by these cancellations, lower fares (as competitor high cost fuel hedges unwind), the absence of Easter in April and Sterling weakness in the run up to the Brexit referendum on June 23.”

    The Profits of ‘In’

    As the referendum deadline looms in the UK, Ryanair repeated its support for the ‘Remain’ campaign in the annual report.

    “Ryanair strongly believes that the UK economy and its future growth prospects are stronger if it remains a member of the European Union (“EU”),” the airline states.

    “If the UK leaves the EU then this, we believe, will damage economic growth and consumer confidence in the UK for the next 2 to 3 years as they begin to negotiate their exit from the EU and re-entry to the single market in very uncertain market conditions.”

    The airline’s CEO, Michael O’Leary has been a vocal proponent of the UK remaining in Europe telling me in an interview conducted earlier this year in Copenhagen:

    “There is no doubt that we as countries are better together, working together, as a stronger single trading block.

    “But there’s equally no doubt in my mind that when the European Union sees things that are fundamentally contrary to the free movement of goods and labour, such as the Danish model, for example, such as Norwegian, the refusal of the American congress to allow Norwegian to fly into the U.S. under the U.S. Open Skies agreement, and the European Union should take action. They don’t.

    “So yes, I fundamentally support the UK prime minister. The UK should be in Europe and Europe needs reform.

    “Because Europe is not a competitive marketplace at the moment. We need to make it more competitive. Low fare air travel, roaming charges for mobile phones, are some of the few successes, but we need to do more.”

    Ryanair has said it will continue to call for ‘Remain’ votes through to the day of the referendum on June 23.

    We Are Not Amused

    Though Ryanair has turned provocative and humorous fare sales into an art form over the years, the ‘Vote Leave’ group objected to being the punchline of the airline’s latest ‘Fly Home to Vote Remain’ campaign, directed at British expats who want to fly home to cast their vote in time.

    The Guardian reported this past week that ‘Vote Leave’ campaigners urged Met police to investigate the airline’s ‘Brexit Special’ as ‘corrupt’ and in violation of the UK’s vote bribery laws.

    “[T]he company is offering discounts on the commercial rate to customers with the sole aim of ensuring that they vote and vote to remain in the European Union,” Sir Bernard Hogan-Howe, Cummings wrote in a complaint sent to the police Commissioner.

    Ryanair responded by extending its €19.99 fares sale, for travel to the UK on the 22 and 23 June, by 24 hours after the ‘Vote Leave’ camp expressed its disapproval.

    “The ‘Leave’ campaign must be getting really desperate if they’re objecting to low fare air travel for British citizens,” said O’Leary.

    “Ryanair is absolutely clear that the UK economy and its growth prospects are stronger as a member of the European Union and the single market than they are outside the EU. With less than 5 weeks to go, we will continue to work hard to help deliver a resounding ‘Remain’ majority on 23 June – and ensure that the ‘Leave’ loonies don’t ban low fare air travel too!”

    Ryanair’s argument in favour of Remain:

    • [Remaining in the EU] will lead to more UK jobs & better economic growth
    • EU open skies has transformed UK tourism & job creation prospects
    • The free movement of goods & services has made the UK one of Europe’s most competitive & best performing economies
    • David Cameron’s negotiated reforms protect Sterling, limits immigration and closer Union, while reducing bureaucracy
    • Foreign inward investment in the UK will be lost to Ireland & Germany if the UK leaves Europe

    “If the UK leaves the EU then this, we believe, will damage economic growth and consumer confidence in the UK for the next 2 to 3 years as they begin to negotiate their exit from the EU and re-entry to the single market in very uncertain market conditions,” Ryanair warns.

    Featured Image: Fly Home to Vote “Remain” promotion. Source: Ryanair, Facebook


    Read More About Ryanair’s Strategy Here:

    Ryanair CEO Interview: The European Union Has Problems, But the UK Should Stay, Skift

    Ryanair CEO Dishes on Digital, Distribution, Growth, Low-Fares, Wi-Fi and Champagne, Skift

    Interview: Ryanair CEO on How Low-Cost Carriers Can Help European Airlines Prosper Again, Skift

    Skift CMO Interviews: Ryanair CMO on Becoming Friendly and Mastering Mobile

    Ryanair CMO Is Looking to Tinder for Digital Inspiration, Skift

    Ryanair’s CMO on the Airline’s Ambitious Low-Brow Content Marketing Strategy, Skift

    Ryanair’s CMO Says It Already Knows the Customers for Its New Private Jet, Skift

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